Joint Secured Loans

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ABC FinanceSecured loansJoint Secured Loans
Gary Hemming

Author: Gary Hemming CeMAP CeFA CeRGI CSP

20+ years experience in secured loans

We’re often approached by borrowers who are looking for a joint secured loan against a property that is owned by more than one person.

As your property is being used as collateral and is jointly owned, when taking out a secured loan, this must also be held in joint names.

Find out more about how this works below.

What is a joint secured loan?

A joint secured loan allows property owners to apply together for a loan secured against their property. When taking out a joint secured loan, they are responsible for repaying the debt together, in equal measure.

Joint secured loans operate on the basis of joint and several liability, meaning each borrower is responsible for 100% of the loan. As such, a loan taken out by two people wouldn’t discharge the liability of one borrower if they we’re to repay half of the loan.

Joint secured loans are usually taken out by two borrowers, although it can be as many as 4, where the property is owned by 4 people jointly.

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Joint secured loan on a property owned in one name

Joint secured loans can usually only be taken out on a property which is jointly owned. Taking out a joint secured loan against a property that is owned by one person is highly unusual and can create a legal can of worms.

Generally, lenders like to see joint borrowers equally sharing the benefit and liability of a loan, so if one person stands to gain and the other is risking their home, the chances of approval are slim.

Who can get a joint secured loan?

Anyone can apply for a joint secured loan and there is no hard and fast restriction on who can apply jointly for secured borrowing. There are no set rules on who you can apply with, but it often includes a spouse, partner, family members and friends. For investment properties, business partners are common.

When applying for a joint secured loan, both applicants must meet the lender’s criteria for credit history, age, income and other eligibility rules. Failure to do so is likely to lead to your secured loan application being rejected.

For more info on business secured loans, read our guide to secured loans for business purposes.

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How much can you borrow on a joint secured loan?

When taking out a joint secured loan, it’s possible to borrow up to 90% of the value of the security property. Of course, your existing mortgage must be considered, so it’s more accurate to say that you can borrow up to 90% of the security property value, minus your current mortgage other legal charges on the property.

On top of the loan to value (LTV) restrictions, your secured loan application must pass the lender’s affordability assessment. Each lender has their own method of assessing affordability and therefore, even if your circumstances are unacceptable to one lender, you still have a great chance of being approved with another.

How can I find the best joint secured loan deal?

The key to finding the best joint secured loan deal is to compare options from a number of lenders. This can be done either manually, which is a very time consuming job, or through a reputable secured loan broker.

The downside to using a broker is that many charge high broker fees for their service. For example, Fluent Money (the broker you end up with if you apply through MoneySuperMarket charge a 12.5% broker fee (£3,750 on a £30,000 loan).

At ABC Finance, we charge a low, fixed £1,495 broker fee.

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Can I get a joint secured loan with a low credit score?

Yes, you can get a joint secured loan with a bad credit history. Some lenders, such as Evolution Money and Together actually specialise in lending to borrowers with a poor credit score.

The interest rates charged by bad credit lenders can vary wildly, so it’s even more important that you shop around, or use a broker if you have poor credit.

Ultimately, the specific credit issues that you’ve had will be viewed individually to build a picture for the lender. Small issues may well be overlooked, whereas recent mortgage arrears are likely to cause a problem, especially if they remain unpaid.

On top of the issue of being approved for a secured loan, there is also the matter of your current mortgage lender giving consent to a second charge. If they are unhappy with your account conduct or feel that you are at risk of falling into default, they may refuse to give consent.

We offer bad credit secured loans from across the market and can offer finance to most borrowers.

How to apply for a secured loan with a joint mortgage

To apply for a secured loan with a joint mortgage, you must do the following:

Get permission from the other homeowners

The first step is to get permission from the other homeowners to make sure that they’re happy to proceed. This is because they will be jointly and severally liable for the loan. They will be responsible for repayment and any missed payments will impact their credit profile.

Work out how much you can borrow

Work out how much you can borrow by talking to a secured loan broker. They’ll be able to break down exactly how much you can borrow. Your maximum loan will be impacted by the following:

  • Your income and outgoings
  • How much equity you have in the property
  • Your credit score
  • The account conduct of your current mortgage
  • Which secured loan lender you apply to

Find the best deal

Your secured loan broker will search the market to find you the best deal. There are lots of secured loan lenders out there and checking them all to find the best deal can be very time consuming without a broker.

Equally, look for the best deal on broker fees too – they can vary a lot and often run into the thousands of pounds, so any cost saving will really help. We charge a low, fixed £1,495 broker fee.

Prepare your documents

Put together your required documents, such as the following:

  • Proof of ID – Usually your passport or driving licence
  • Proof of residence – usually a utility bill dated in the last 3 months
  • Income proof – such as payslips or tax documents

Make an application

Once you’ve completed the other steps and you’ve chosen your preferred product, you can make your application!

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